Cover Letter

Written: July 1, 2000

Last Reviewed: August, 2006

To: The MIT Administrative Community

From: Members of the Financial Review & Control Team

The Massachusetts Institute of Technology (MIT) Controller convened a team of individuals in July of 1999 to review existing procedures for reconciling cost objects (accounts), and to recommend new guidelines for financial review and control. This project was necessary due to the recent and significant changes in MIT’s financial systems, and the Institute’s increasing reliance on electronic documentation. Both central organizations and departments, laboratories and centers (DLC’s) were represented in the team’s membership, which included participation by the Audit Division.

After careful consideration by team members, new policies and procedures for performing monthly financial review were developed. These policies and procedures are described in the enclosed document “MIT’s Guidelines for Financial Review and Control”. These new guidelines relate primarily to the month-end review process, and do not dramatically change the basic system of financial controls in place at the Institute. In developing these guidelines, there was an effort to move towards a system allowing a paperless review for those desiring to perform the review electronically, while accommodating those choosing to continue to use the existing paper-based system.

Transactions can be reviewed on paper, on line within the Systems, Applications and Products (SAP) software, or through a set of queries developed for the data warehouse. New standards allow for less paper retention. While any individual may choose to retain a wide variety of documentation for his or her own purposes, only documents for which no copy exists electronically or within a central unit must be retained within a given DLC. The only documents that must be retained within the DLC are the packing slips (or other evidence of receipt), credit card receipts, original signed timecards, and signed consolidated salary expense analysis sheets (DACCA’s).

The requirement for the "four way match" (invoices, packing slips, requisitions, and PO's) has been eliminated. The requirement for checking off detailed transactions on printed detail transaction reports has also been eliminated, and replaced with a simplified mechanism for indicating financial review. Each month the individuals performing review procedures must sign and date a simple signoff sheet to indicate that this review has taken place. Again, those choosing to continue to check off detailed transactions on printed reports may continue to do so.

The suggested approach is risk based. Transaction types where the risk of error or abuse is intrinsically high should be reviewed in detail, while transaction types where internal controls are extensive require less detailed review. New electronic resources are now available, and these tools provide access to data that may assist Administrators in accomplishing financial review. A number of new Brioquery reports have been developed, and Administrators may choose to use these reports in managing their work environments. These reports allow an individual to review transactions by transaction type across a group of cost objects rather than reviewing transactions on a cost object by cost object basis.

It is ultimately the responsibility of the Administrative Officer (AO) in conjunction with the Department Head to determine how to best manage work activities within a DLC, while meeting minimum standards for financial review and control. The enclosed document has been prepared in an effort to clarify expectations of AO’s for assuring appropriate financial controls within a DLC. This is an evolving process, and new procedures will continue to be developed as needed in order to respond to the needs of the MIT community. We look forward to working with you to refine these procedures in the future.